A friend backed out of a deal and has created a huge problem, what do I do?

I've been thinking about this and haven't decided what to do. I'm interested in some opinions. A friend rents out rooms in his home and I heard about an opening. I asked if he was looking to add a roommate or if he was replacing a current one (who he said has been abusing things by having his girlfriend over 25 nights a month). He said he wanted to replace this person. He tells me the guy was planning to move out within 60 days. I said I want to take the room and he agreed. I paid him a storage fee and moved all my things into his garage until the other guy moves out. Anyway two weeks later he calls to tell me that the guy changed his mind and wants to move his girlfriend into the house permanently (with her now also paying rent). So he does this after I went through the hassle of moving... and he ASSURED me in advance he'd encourage the guy to move out sooner! I can't believe he just decided it was okay to let the guy stay after we made a deal. How should I react to this?